Oaktree’s $10bn fund on track yet returns drop

OAKTREE Capital Group, the world’s largest distressed-debt investor, last night announced a fourth quarter net profit of $24.4m (£16m) for the three months to 31 December, down from $64.9m a year earlier.

The company joins the long list of firms affected by the unexpectedly low oil price, which dropped 39 per cent in the quarter, but the fall in profit was also caused by what co-chairman Howard Marks described as “a relative lack of distressed opport-unity in a low-default-rate environment”.

Oaktree said its adjusted net income fell to $98.4m for the quarter from $268.4m a year earlier.

Marks said energy related investments made up about eight per cent of the company’s holdings but the plunge in oil prices may usher in a new era for investing in distressed debt, which the company was quick to capitalise on, having already spent $400m on assets.

Assets under management were at $90.8bn as of the end of 2014, up nine per cent from the year-earlier level, in part because of raising new capital and the purchase of infrastructure investor Highstar Capital.

Regardless of the decreased profit, Oaktree is forging ahead with a plan to raise another $10bn for a distress-asset fund, Oaktree Opportunities Fund X, and Marks said its first closing was only days away.

Marks said two of the areas where Oaktree had invested heavily, in real estate and in Europe had the highest returns.